MNI China Press Digest Dec 10: Tax, Economy, Politburo

Highlights from Chinese press reports on Wednesday:

• Authorities can mitigate the adverse effects of an aging population on tax revenue through stronger support for the technological transformation and smart manufacturing, which would enable businesses to alleviate rising labour costs through automation and digitalisation, stabilising profit margins and the tax base, according to Li Xuhong, vice dean at the National Accounting Institute of Beijing. For income tax, attention should be directed towards high-net-worth and high-income individuals, including cross-border tax sources, Li added.
• Analysts from Huatai Securities forecast that China’s cumulative year-on-year decline in fixed-asset investment from January to November could deepen to approximately 2.5%, with the month-on-month drop widening to 11.5%. Persistently weak real-estate investment was driving the decline, although there are signs of a modest improvement to infrastructure investment, analysts added. A CICC report highlighted that while new policy-based financial instruments were largely deployed in October, the physical investments from these initiatives may not be fully reflected until later months, given the onset of winter and reduced construction periods in northern China.
• The December Politburo's renewed emphasis on cross-cyclical adjustments signals a shift toward prioritising long-term economic stability and a more balanced approach to structural optimisation. According to Lu Zhe, chief economist at Dongwu Securities, the commitment to moderately loose monetary policy will see the PBOC maintain a supportive stance and focus on improvements to the efficiency of existing funds. In addition to conventional monetary policy tools, structural instruments will play a pivotal role in targeted support to key sectors and addressing vulnerabilities in the economy.